S.A. hotels had it made in the shade this summer

Updated 1:09 am, Thursday, November 8, 2012

The San Antonio skyline looking from the east side toward the west is seen in this April 10, 2012 aerial photo.
(William Luther/wluther@express-news.net)

The San Antonio skyline looking from the east side toward the west is seen in this April 10, 2012 aerial photo.
(William Luther/wluther@express-news.net)

Photo: William Luther, San Antonio Express-News

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BUSINESS ----- The downtown San Antonio skyline is seen Friday morning July 27, 2007 from the still-under-construction Hyatt Convention Center Hotel. (WILLIAM LUTHER/STAFF)

BUSINESS ----- The downtown San Antonio skyline is seen Friday morning July 27, 2007 from the still-under-construction Hyatt Convention Center Hotel. (WILLIAM LUTHER/STAFF)

Photo: WILLIAM LUTHER, SAN ANTONIO EXPRESS-NEWS

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Downtown hotel occupancy rates have improved during the summer in the past two years even as room supply continued to grow.

Downtown hotel occupancy rates have improved during the summer in the past two years even as room supply continued to grow.

Photo: Mike Fisher

S.A. hotels had it made in the shade this summer

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San Antonio hoteliers enjoyed their best summer season in years as a growing crowd of visitors allowed properties to start charging more per hotel room, state and local data show.

It's the first significant bump in San Antonio room rates since the recession started.

The economic downturn coupled with a flood of new hotel rooms forced the local hotel industry to slash room rates and entice guests with discounts. This year, however, tourists appear to be traveling more and willing to pay more for rooms, boosting hotel and motel revenues in the process.

Citywide, room demand between June and August increased by an average 6 percent compared to last year, the Convention & Visitors Bureau says.

At the same time, occupancy rates climbed to 75 percent downtown and 73 percent across the city — the highest points since 2006 and 2008, respectively.

Summer hotel and motel revenues from June to August exceeded $271.3 million this year, up 12 percent over the same period last year, according to hotel occupancy tax records from the Texas comptroller's office.

In contrast, hotel revenues only rose 4 percent from 2010 to 2011, even though summer room demand at that time increased at the same pace it did from 2011 to 2012.

“This year's been very nice to our hotels,” said Rusty Wallace, president of the San Antonio Hotel & Lodging Association and general manager of the Omni La Mansión del Rio and Mokara Hotel & Spa.

“We've had a steady incline in business since 2009 (when) we got hit with a double whammy here,” he said. “We were opening hotels at the exact time as everything was slowing down.”

In response to the recession, businesses cut their travel budgets and vacationers stayed home. Additionally, nearly 10,000 rooms were added to the city's supply from the beginning of 2008 to 2010 — 2,000 of them just in downtown, PKF Consulting USA says.

That combination pushed the average downtown summer occupancy rate to a 10-year low of 69 percent.

Once the recession made its way to San Antonio in 2009, the average daily rate for a room in the summer fell nearly 10 percent to less than $95. Prices stayed relatively flat until 2011, when hoteliers dropped their room rates further.

This summer, however, the average rate in June topped $100.

Wallace said increased bookings of government group meetings, a new water park at SeaWorld San Antonio, beautification projects along the river and more have increased the city's ability to attract tourists with newfound confidence in their finances.

“We've been trying to turn from being a two-day destination to maybe a three-day and four-day destination,” Wallace said. “We are seeing people staying an extra day here than we have in the past.

“As the hotels begin to fill up, to get more tight in their occupancy, then obviously we're able to charge more,” he added.

In fact, downtown hoteliers have welcomed their highest levels of revenue per available room in four years.

Revenue per available room, or REVPAR, measures both room rates and occupancy to provide a snapshot of how well a property fills its rooms and how much it can charge for each. The higher the REVPAR, the better the indication that the city's hotels are running more efficiently, Bojanic said.

A study from PKF Consulting found REVPAR fell more than 21 percent in 2009, Wallace said, but that indicator could recover soon, with projected growth rates of 6 percent this year and nearly 9 percent next year.

Downtown REVPAR hit $89.36 this summer, an 8 percent increase over a five-year low of $82.62 in 2010.

“It's significant. And looking forward, our numbers look to be in pretty good shape,” Wallace said. “We're bullish on next year.”

At SAHLA's regular meeting later this month, PKF Consulting will issue a new trend report about San Antonio hotels, which Wallace said should absorb an increase in room supply forecast at 2 percent for the next three years.

Such slight growth, coupled with increasing room demand, should allow hoteliers to charge higher rates in the future, though Bojanic said visitors still will flock to San Antonio for its affordability.

“We have that benefit of being that value destination and look much better compared to Dallas” and other Texas cities, he said.